The Kremlin's Confidant, page 28
In 1990, Martin’s approach came when the Greek was stretched as a journalist, managing the Moscow office of a Greek radio and television station, and handling its owner’s shipping relations in Moscow. He concluded that the greatest immediate contribution he could make to Martin was money. He raised a $200,000 loan against the security of his house on Massachusetts Avenue NW, Washington, and gave the funds to Martin.
Martin thus started the decade with his continuing vision of improving the lot of the Russians and with new tools to do so. He may have lost the focused – and focusing – commercial savvy of Reid, but he had new funds; the support, if from the background, of Filippov; the increased involvement of Nicolopoulos and his ever-fresh ideas and contacts; and a trusted aide in Byron Veras, who was now spending most of his time in Moscow.
He was also to be joined by another Englishman, James Castle, a man who, like Brian, prioritised profits. Castle, the new member of the post-Reid team, came from a farming background. His father was one of the top traders in dray horses in Britain with a large estate 12 miles east of Oxford. Known since his childhood as ‘Chub’, Castle, tall, warm and clean cut, had trained as a chartered surveyor and then taken over the family farm. He had been a successful jockey, was a judge at horse shows, and had built up one of the larger pig-producing units in Britain.
Castle’s first trip to the Soviet Union was in October 1990 when he went with Terry Miall, the husband of Martin’s sister, Mary, to Krasnodar in Southern Russia to look at stud farms. They met with local dignitaries and visited a number of nearby facilities. The farm managers greeted them as pioneers, promoting their dreams with copious quantities of vodka. All wanted to sell their horses. At the Kuban State Farm, one horse caught Castle’s eye and he asked the director of the farm, Vladimir Alexeyenko, to assemble others like it. He and Miall then returned to England. Shortly afterwards, Alexeyenko called him to say he had done as Castle had requested. Castle flew with his vet from Oxfordshire to Moscow and then back to Krasnodar. He was shown the same horses he had already seen.
Disappointed, he flew back to Moscow. He visited various horse stations and sales yards on the outskirts of the city, buying six horses from Number 1 State Stud, a 3,000-hectare estate known locally as Moscow’s Switzerland. Dignitaries like Gorbachev had their dachas in its wooded reaches. He got the horses back to England in February 1991 – at that time, there were no quarantine restrictions or swamp fever bans – to find the horse market in the doldrums. The horses he had bought were all 2 or 3-year-olds, so he held them, breaking them in, feeding them and eventually selling them. Overall, he made a small profit.
Castle never went back to the sales yards or horse farms. It was an unpromising introduction to the Soviet Union for a man who had already established himself elsewhere. But his appetite was whetted. And he too fell for the powerful combination of Martin – to whom no door seemed closed – and of apparently privileged access to the endless resources of this suddenly opening economy. Their partnership was to last for two decades, proving one of Martin’s most durable relationships.
This group seemed ideal to take advantage of the openings as perestroika meant that every asset in the Soviet Union had become a potential opportunity – and the mafias that were to make life precarious had not yet moved to centre stage.
Martin’s aim was to act as a catalyst in the creation of new ventures in the Soviet Union and its successor states, and to share in the profits that his imagination and contacts helped create. In May 1990, to handle this business, he set up ECO Enterprises Limited, the ECO standing for European Commercial Options. Castle joined its board in February 1991:
ECO and its successor, EHL,1 were founded to act as an intermediary in the establishment of commercial activity in the former Soviet Union. It was assumed that they would do the pioneering work in the former Soviet Union and would then locate and introduce specialist management and appropriate foreign funding. EHL expected to be remunerated by a contribution to pre-expenses or introductory fee together with an equity holding or carried interest in the project and a fee for the continuing provision of services within the management structure.
This is how Martin described his business model in 1994. By then, the flaws in the model were becoming clear.
At the end of 1990, the ECO team moved into offices in the old part of Moscow, 2km north of Red Square. After reconditioning a couple of rooms, they set to work. It was, as Veras remembers, ‘the beginning of an exhilarating period where our little ECO office became one of the most active “railway stations” of Russia. The traffic through our office was absolutely incredible.’ Nicolopoulos, who had become a director in March 1992, was supporting from outside, Martin was establishing bridges particularly with England, and Veras saw his role as the foot soldier, finding and implementing the opportunities.
Veras was supported by three ladies: Olga Kazakova, the office head; Gulya, an Armenian economist/accountant who later became head of her own factory; and Anya Fotiadi, a former textile technician with a story of her own. The last of these was a princess from a mountain Turkic tribe, the Kabardino-Balkaria, in the Caucasus north of Georgia. As Nicolopoulos tells it:
They were wild mountaineers, very, very dangerous people. Anya had married a Greek Russian who turned out to be a total scoundrel. Thank God he is now dead because he and his mother were a set of villains whom I would not have in my address book.
In order to get permission to marry this girl from the mountain tribal council, he swore that, if ever a hair on her head suffered, he was at their disposal to have his head taken off. They were convinced by his vow and gave her to him in marriage.
Anya and he had a beautiful child. But he had a mother who was the quintessential negative mother. She was a nurse and a parachutist who ended up working in the Kremlin Hospital, where the mothers and grandmothers of old Bolsheviks lay, each of whom had a little pouch of jewellery in their mattress or pillow. They gave jewellery items to her which she sold and gave them money. She and her husband and son came to the attention of the authorities. They were accused of diamond smuggling. He was arrested and spent several years in jail. He drank himself to death. Then she said she would take her grandchild to the country for a weekend. Instead, she and her son boarded a plane with the child and went to Greece, having bought a divorce without telling the mother. At that time, in the Soviet Union you could buy anything. So one day Anya wakes up and no longer has her husband or her child. The only thing she had was our office. She turned that into her family.
In Nicolopoulos’s view, these three women were wonderful but Martin did not appreciate their value: ‘He looked for “Mata Hari types”.’ A later such, courted and then enthroned as head of the office, was to oversee its closure.
The main task of the three ladies was to filter what was of interest from the traffic through the office and, as Veras describes it, ‘to eliminate the charlatans peddling impossible dreams’. But, as things fell apart in Russia, almost everything seemed – and was – possible.
For Martin, two relationships were particularly important at that time, both played out in Moscow but with two very different parties – the Russian Orthodox Church and the Scottish investment bank, Robert Fleming & Co. Each was to break the seals on systems long concealed from the outside world. Their course and fate were to prove characteristic of the plethora of projects which Martin developed and followed but which, almost always, slipped through his fingers.
Archbishops in Moscow and London
Charity
As perestroika advanced, the leadership of the long-persecuted Church began to feel more self-confident and to look for ways to break from the political constraints of the collapsing Soviet order. Nicolopoulos, a Greek Orthodox by background, had developed a close dialogue with the top clergy in the Moscow area. They told him that they wanted to link up with Western charitable organisations and increase their revenues. For Martin, the son of a reforming priest and imbued with the ambition of improving the lot of the Soviet citizen, this appeared a grand opportunity.
Nicolopoulos’s main contacts were with Bishop Pitirim Dondenko, who was responsible for the Church printing house. Nicolopoulos had met him when Ted Turner sent 10,000 Bibles to Moscow and asked Nicolopoulos to arrange their delivery to the Church. Nicolopoulos did this, though the delivery had a ghastly cost. The rumour got around that the Church had also been sent money. A group broke into the monastery of Trinity Lavra of St Sergius, the spiritual centre of the Russian Orthodox Church, at Sergiyev Posad,2 tortured Innokenti, the assistant of Pitirim, to hand over these non-existent funds, and, after killing him, threw him from a monastery window.
Nicolopoulos also knew Bishop Sergei (Fomin) of Solnechnogorsk, chairman of the Synodal Department for Church Charity and Social Service, and it was on him that Martin focused his attention. Nobody else was sponsoring children’s homes or specialist medicare and he believed he could tap the skills of Britain’s National Health Service. In autumn 1991, he met a philanthropist, Ivo Fuchs, who was interested in supporting projects for children; his wife, Sonja, remembered how the Russians had looked after her father when he was a prisoner of war and wanted to give something back. Encouraged by Fuchs, Martin made several visits to Moscow, working with Nicolopoulos to find a suitable building and on the legal framework required for the children’s home. Fuchs was a German Jew who had moved to the UK in the 1930s and set up home in Wiltshire. He had made his fortune trading rayon, and used to tell Martin that he could write a cheque a day for $10 million and not feel the difference.
Fuchs had also commissioned Julia South, a Russian-language interpreter from Sheffield specialising in the charitable sector, to assist in setting up a children’s home. He identified a British man whom he wished to run the home. South considered him inappropriate, but was dismissed when she said this. The home was eventually established as a joint venture with the Russian Orthodox Church, but Martin, like South, was pushed aside by Fuchs who refused to pay the bills and expenses the two had incurred on his behalf. Years later, South visited the home when working for the UK Department of International Development as part of a team developing a project on ‘de-institutionalising’ children. As she wrote to me: ‘By this time, I had learnt that the least useful thing you can do is set up a children’s home! Institutionalisation is not good for children. The Fuchs would have been better putting their money into imaginative fostering and adoption schemes.’
In January 1992, Martin and Nicolopoulos brought Bishop Sergei to the UK, arranging for him to meet with Archbishop George Carey at Lambeth Palace. He took his visitor to a recently opened hospice for the terminally ill in Adderbury, a children’s hospice in Oxford, and a sheltered home for the elderly in Oxford directed by Mary McMaster. They visited the latter’s family charitable trust, the Mary McMaster Trust, and it was this which was to open a sheltered home for the elderly in Moscow. Martin identified an appropriate building and assisted with the preparatory legal work. He then found it hard to work with McMaster who would insist her decisions had been confirmed by God. He left, his efforts unrewarded.
By this time, he had persuaded the Patriarch and the Archbishop of Canterbury to become patrons of the Trust of St Seraphim, an initiative to tackle health needs in Russia. To trace the activities of this trust, a quarter of a century later, I first contacted the Reverend Dr Canon Michael Bourdeaux, the founder of the Keston Institute for the study of religion and communist countries at Oxford, who set me on a course of epistolary and episcopal discovery. In one weekend, I was in touch with the Right Reverend Professor Lord Harries, former Bishop of Oxford, who introduced me to Stephen Platten, Archbishop Carey’s Secretary for Ecumenical Affairs and later Bishop of Wakefield, who introduced me to John (Jack) Nicholls, the former suffragan Anglican Bishop of Lancaster. Platten remembers that the Trust’s meetings took place in his study in Lambeth Palace, with Nicholls as chair. ‘The Trust did achieve a little. Certainly, equipment – prostheses, wheelchairs, crutches and the like – were sent out to Russia. Bishop Sergei of Solnechnogorsk – he dealt with such social/medical issues at the time – and the Russian Orthodox Church were involved. Eventually, the Trust rather ran itself into the ground.’
Martin had brought the parties together but was not part of the Trust itself. He surmises that a business partner, Harold Elletson, had him excluded. Elletson had started as director of ECO Development in December 1991. By late 1992, he was threatening court proceedings to recover the £10,000 he had provided the company. Later described as moonlighting for British intelligence,3 he became a Conservative MP and chairman of The Campaign for the North, a wishful effort to re-create the ancient kingdom of Northumbria.
Reforming agriculture
Martin had come to understand how, in the centuries before the Communist Revolution, the agricultural system across Russia had revolved around the monastery. The priests, who often had technical expertise in farming, would give out seed, take in product and tended to be at the centre of regional agricultural schemes. He envisaged that, with the collapse of the Communist Party, their role as agricultural intermediaries might be revived. The priests with whom he was talking insisted that the Church still had that same network and the loyalty of the peasants. Russian priests, like Greek ones, are usually crop-growing peasants doubling up as priests. He concluded that the easiest way to deliver farming expertise across Russia was through the Church network – no one else had a presence in every part of Russia close to peasant level. They said they knew everybody who would be prepared to work under the market system being ushered in by perestroika – and who would slack.
Gorbachev had promised the peasants that they would get their land back and in Martin’s view the Church represented a uniquely powerful ally in helping a renaissance of the agricultural system and introducing the reforms which he and Castle had identified as required. As he said of a trip the two had made to Lithuania:
Chub and I saw that there was no farm where you could not double output with a bit of knowledge of seed technology – the villagers only had what Moscow sent them – and crop rotation. They also lacked harvesting equipment. In potatoes and beet, for instance, where the harvest season is short, they did not have lifting equipment so if the crop was 100 tonnes, they would lift only 40, and then they couldn’t store 25 of those, so they ended up with 15.
Almost everywhere he went, Chub reckoned he could double output, and quadruple what the farmer stored. He argued that a second-hand ten-year-old machine to pick up potatoes for £500 or turnips for £2,000 would triple what they harvested. For post-harvesting storage, cheap portable methods were available, while on the animal side they needed modern stock-breeding methods and treatment and storage of slaughtered animals.
We saw that you did not want to put new machinery out there. Britain is littered with equipment which had been good twenty years ago. There was probably sufficient discarded machinery on British farms to make a decisive impact on a large area of Russia. So we devised a scheme to establish a fund to make this happen, with all the money spent in England going to farmers to buy their old equipment. The money would go into the pockets of British farmers, but the Russians would get the benefit. It would be backed by efforts by Britain’s VSO programme for technical aid to support Russian peasants with land and soil technologies.
Fired up with this idea of the British government working through the Russian Orthodox Church to triple food output in Russia and with Bishop Sergei accompanying them, in January 1992 they visited John Gummer, the UK Minister of State for Agriculture, Fisheries and Food. The Archbishop of Canterbury had expressed his support, asking the bishop what he should pray for. The Russian replied, ‘God has already sent us Martin Packard. We need nothing else.’ Martin remembers that the Russian, who was accompanied by the head of the Leningrad theological college, was fond of singing Russian songs in pubs – and that he became a target for Canon Bourdeaux who would turn up where they were appearing and denounce the bishop as a tool of the KGB.4
Gummer had allocated his visitors thirty minutes but, enthused by their proposal, cancelled his other appointments. In Martin’s view, he could not have been more receptive. He then called his staff who said, ‘Minister, of course, we cannot do that. Our job is not to sell second-hand equipment, it is to sell new equipment.’ They began to pull the visitors’ proposal apart. It turned out that they had arranged the allocation of £10–12 million to develop a model British farm in Russia. This would be stocked with model British machinery and be a showcase for modern British farming.
Martin already knew about this and told Gummer that the Russians were laughing at the idea. They said it was going to be in the wrong place up north and that all of it was wrong. The equipment was too modern. It needed a support network and spare parts. It needed modern servicing. It had built-in computer systems which Russian blacksmiths couldn’t handle. Packard said to Gummer, ‘Give them old equipment and they are going to be very loyal. Once they have made some money, they will turn to you for advice, and you will be able to build a network right across Russia, advised and helped by British support.’ Thirty years on, he believes that of everything he did in his life there was no scheme that could have had a more profound impact: ‘These wretched civil servants just killed it.’
Innovation
Another issue concerning the Russian Church was helping the numerous veterans returning maimed from the war in Afghanistan. Martin took the visiting bishop to meet Sue Butterworth, head of Dialability, the Oxford Centre of Enablement, a charity supporting the disabled. He then visited a number of British firms making support equipment, several of which were looking for lightweight equipment, possibly manufactured from titanium.
